In recent years, the rice industry in Korea has intensified the price instability due to a glut of supply and demand imbalance. While the rice production increased due to the favorable weather conditions and increase of production per unit area, rice ...
In recent years, the rice industry in Korea has intensified the price instability due to a glut of supply and demand imbalance. While the rice production increased due to the favorable weather conditions and increase of production per unit area, rice consumption is constantly reducing with dietary changes due to the increase in income level and the development of food service culture. Therefore, the purpose of this study is to analyze whether an introduction of rice production control can solve the fundamental problems of rice price issues directly related to the rice oversupply problem and farm income by analyzing various effects in conjunction with direct payments program, which is currently being carried out when rice production control was introduced, by focusing on the introduction of rice production control that is mentioned as a solution for such rice oversupply resolution.
First, when production control of Korea, Japan, Taiwan, and US was inquired, it was analyzed that the effect of implementation of production control varied according to the country's policy structure and alternative policies of production control. Also, the effect of production control also vary according to the period of consideration after the introduction. Although the market price rises in short because quantity of supply is reduced as much as the amount of rice production control, it was verified that the quantity of supply was not reduced as much as the amount of rice production control in the long-term as the price hikes in short-term acts as the production incentives.
The results of examining the effects of introducing policy option in short-term based on such analysis showed that the rice production control influences producer, consumer welfare, and government financial transfers as it rises domestic rice market price regardless of policy alternatives, and eventually, it was affecting the well-being of the whole society. First, fallow compensation was verified that the welfare of rice producers and government increased, where as the welfare of consumers decreased. However, if amount of production control exceeds 100 thousand tons as the rise of farmgate price and market price differ from each other according to the characteristics of direct payment with separated market price and farmgate price, it showed that the welfare reduction was greater than the welfare increment.
Next, as the difference between production diversification and fallow compensation that even affects farm crop market, the production diversification brings conflicting results in the farm crop market from the rice market. The welfare of farm crop producers significantly decreases when the farm crops are achieved as domestic low production of crops. When social welfare level was compared to the fallow compensation, the farm crops compensation rather decreased more significantly by reducing the welfare of previous farm crop producers.
The results of this paper has provided many useful information in relation to the introduction of rice production control. First, at a time when direct payment of rice is currently being implemented, they are considered to be helpful in rice production control related policy formulation by providing basic information about the effects of each policy alternatives of production control.